Addressing grid problems: The solutions of the future

In our evolving energy landscape, grid problems have emerged as a pressing concern, with local over-voltage being a phenomenon attracting a lot of attention. After the recent surge in solar energy deployment across Europe, homeowners with solar panels often faces the blame for these issues, a line of reasoning often put forward by stressed local grid operators. But is that criticism fair? And is it correct to curtail solar energy if so?

First, let’s unpack the problem, and let’s start with how the electrical grid works. A good way to think about the power grid is it’s a little like the network of highways and city streets that connect us, in that it is a network that consists of big high voltage lines criss-crossing the country and lower voltage local grids. In order to operate properly, the grid needs to have a near-constant voltage, and this is obtained by exactly matching the supply and demand of electricity at any given time. No small task! This is achieved by a) planning ahead and not turning on all the production capacity when expecting low demand etc, and b) calling on flexibility to adjust when that planning fails, for example by having industrial manufacturing reduce their demand. 

There are lots of interesting issues at the “big grid” level here, but we’ll leave them for a later blog post, and focus on the local grids, where new solar energy often gets blamed for adding hard-to-handle amounts of power at locations in the grid where it’s hard to absorb it. But here, it is essential to recognise that solar is not the root cause but rather an additional strain on an already weakened system. 

The Real Culprits

Grid problems can result from outdated infrastructure, insufficient investments in grid upgrades, and inadequate planning to accommodate the growing demand for electricity. Although solar energy may expose these deficiencies, it is not the primary cause. 

The state of grids across Europe is often very poor. Precariously underfunded by insufficient investment or irresponsible focus on short term profitability for years, or constrained by legislation that prevents them from accessing all solutions to a problem, grid operators will often attack the latest incarnation of a changing consumer landscape, usually electric vehicles and solar panels.

This is disingenuous. Take my native Norway as an example. With just 10,000 residential solar systems nationwide, local grid operators are making noise about the instability caused. By contrast, Poland installed 10,000 systems on a weekly basis in 2022, and although there are legitimate concerns about absorbing all of that, it illustrates that our grids can safely be pushed much, much harder than they currently are. Norway’s grid overall operates at less than 20% capacity, for reference.

The issues arise from pre-existing grid weaknesses. Addressing these will be costly. But these investments are very moderate compared to the benefit of turning the passenger vehicle fleet electric (necessitating the accommodation of hundreds of millions of home charging points across Europe) and of decarbonising electricity production (relying on massive amounts of distributed solar energy). Holding back on EV charging or solar deployment cannot be the right way to go about it.

Who pays?

OK, so we need to invest in the grids. But who pays for it? At first it would seem reasonable that it is the consumer adding a charger to her garage or solar to her roof, right? But that’s privatising the cost of upgrading societal infrastructure while socialising the benefit of decarbonising cars and power production. Also, all consumers benefit from more solar production, even those without panels on their roof, because it marginally moves the price downward. Charging the consumer would be like an absurdly inverse “polluter pays” principle.

The EU has recognized this and anticipated that grid operators and often local regulators would be happy to pass the bill to the forward leaning consumer, rather than absorb the investments themselves. That’s why the 2008/2001 EU renewables directive clearly states that consumers with solar panels or batteries cannot be charged unfair or outsized bills. This policy echoes similar legislation in the telecom domain, in which the EU played an active role in protecting the users’ rights against monopolistic incumbents (remember roaming charges, folks?). But that doesn’t prevent the grid players from trying.

So the grid operator needs to pay. But how do you fund them in a world where they are set up to bill by the kilowatthour and the number of kilowatthours is disappearing at the same pace as black and blue panels show up on roofs, or where people can move their kilowatthours around because their cars can charge in one place and discharge in another? True dilemma. 

Insurance scheme or central banking

Assuming policy makers do the right thing and don’t fight technology, disruption from new technologies will erode the basis of business of the grid as a backbone of daily electricity supply. It turns into an electricity provider of last resort, the place you turn when all other options are out: No sun for days, no wind for days, all local and all large scale storage facilities emptied out, all flexible demand exhausted.

This rare-event insurance could be a state responsibility, a bit like when the central bank steps in when all lending options are exhausted in banking. Or it could be a business case for someone selling the rescue service - think Goldman Sachs buying up local grids and selling a “blackout insurance as a service”. In Europe, I’d put my money on politicians and regulators operating for the state centralised model… In which case they should be less shy about starting to shift grid financing from user payment to taxation.

A problem that will go away

Now enough with the problems. Solutions!

Surprisingly often the solutions are simple and cheap. A customer of ours became a minor local celeb because his system kept being curtailed due to over voltage. After a few mentions in the local press however, the grid company solved the issue in hours. Not days, weeks or months. Hours. I suspect no major investment done. Adjustments at the sub-divider level = a few man hours in cost and many decades of benefits to society from the new solar system. 

And that’s just the start of it. In Europe, batteries are currently attached to approximately 20% of solar systems on average. However, this percentage varies across countries, with Italy and Germany leading the way with up to 80% of solar systems being equipped with batteries while France and Norway are close to 0. But uniformly, battery attachment is growing, and with it, solar energy will become increasingly helpful to the grids. The combination of solar panels and energy storage systems allows for the efficient capture and storage of excess solar energy, which can then be released during peak demand periods. 

14 percent of new vehicle sales in Europe where battery electric vehicles in March. That number is growing too. As the percentage of EVs on the road continues to rise, their contribution to addressing grid problems becomes increasingly valuable. A battery on wheels in your garage can usually hold the equivalent several days worth of electricity consumption of a home. For my household the car holds about 36 hours of average house consumption (less in winter, more in summer). 

EVs can play a crucial role in balancing demand and supply fluctuations by not only drawing power from the grid but also supplying excess energy back to it through bidirectional charging. The former is a practical reality in most European markets, and companies like Tibber and Octopus Energy orchestrate fleets of chargers to save money for their subscribers and help shave the peaks off grid pressure. The former bidirectional flow of energy helps stabilise the grid and reduces the strain during peak demand periods and is increasingly standard on new EV models, for example all Volvo/Polestars starting this year. Also, charging equipment manufacturers and solar inverter makers are announcing bi-directional gear to be commercially launched in the coming months.

And then there’s more smartness in the home. If you think about it, it’s crazy that a solar energy system should shut off because the local grid can’t handle the extra output when there are lots of fridges and freezers that could be only minutes away from needing an extra cooling cycle or washing machines timed for a later start that might just as well start now. Increasingly the things in our homes will know this, and play in concert with our production and storage devices. Miele, Samsung and IKEA, we can’t wait!

More, smarter and cheaper

So what do we do on the policy front, then? We need greater investments in upgrading and modernising the existing grid infrastructure. This will enhance the grid's capacity to handle fluctuating renewable energy inputs and minimise voltage issues. But it can’t only be more money, it also needs to be smarter money. Integrating advanced technologies like smart meters, batteries at grid operator level and real-time monitoring systems in the grid is crucial. Intelligent grid planning can enhance voltage control, balance power distribution, and facilitate the seamless integration of solar energy.

We’re seeing a shift in which the energy we consume will become cleaner and cheaper. But that comes at a cost at the grid level. Society needs to set itself up not to hold solar back through insufficient grid investments, and that’s a social responsibility. The positive externalities of solar simply will not materialise unless the grid is built sufficiently robustly, and that responsibility can’t fall on residential and commercial solar investors.

In a sensible debate, we ought to avoid attributing grid problems solely to solar energy. Instead, solar should be seen as a catalyst for change. Solar energy serves as a latecomer, bringing to the forefront a problem that has long been hidden.

Grid problems, particularly those caused by local over-voltage, require comprehensive solutions that address underlying grid deficiencies while integrating renewable energy sources like solar. Failing to do so, we leave the benefits of plentiful, cheap and clean energy on the table.